Claims

A Glut of Medical Causation Claims

Pinpointing whether a particular injury was work-related challenges physicians and employers. Some schemers take advantage.
By: | February 20, 2017 • 6 min read

So called “cappers” or “runners,” who are middlemen in fraud schemes, are illegally recruiting recently unemployed workers to file murky medical-causation allegations, helping to drive a surge in Southern California workers’ compensation cases.

“We are getting slammed with really unscrupulous lawyer-developed cases,” said Robert G. Rassp, a Southern California claimant attorney and author of the law blog “The Rassp Report.”

“They add in their claim not just the back injury, but psychiatric claims, sleep disorder and sexual dysfunction. They throw the whole book at the employer. Risk managers are going berserk over it.”

The participants in such schemes take advantage of California’s workers’ comp causation standards allowing the filing of cumulative trauma injury claims after a worker has been terminated, Rassp said. California further allows compensation when the causation is less than 1 percent work-related.

Even without the involvement of cappers, California’s liberal causation standards create headaches for employers in terms of apportioning between industrial and non-industrial factors behind post-termination cumulative trauma claims.

“We have a huge problem with this,” said a Southern California risk manager who asked not to be identified.

California’s laws are just one issue currently fueling more nationwide discussions about medical causation standards and the challenge of determining whether workplace exposures are responsible for specific cumulative trauma claims.

Robert Rassp, claimant attorney

Claims-payer desire for more states to adopt stricter injury-causation standards along with the shifting nature of jobs and worker demographics are also stirring those discussions.

Claims with questionable medical-causation assertions have always presented a conundrum for payers: Failing to challenge cases when the injury cause is not work-related leads to paying unwarranted benefits and emboldens others to file similar spurious cases.

Wrongly challenging claimants, on the other hand, when their medical conditions legitimately arise from work, can needlessly drive litigation costs, with the severity of those expenses depending on state statutes.

In Pennsylvania, for example, claims payers lacking a reasonable basis for contesting an injured worker’s petition may be ordered to pay the claimant’s lawyer fees and litigation costs, said Michael D. Sherman, a defense attorney at Chartwell Law Offices LLP in Pittsburgh.

Determining causation is easier when an obvious workplace accident, with witnesses, causes an easily identified injury like a severed finger or broken bone.

But with a cumulative trauma injury or chronic problem occurring over time, such as an inflamed shoulder or lower-back pain, confirming unequivocally that it arose during the course of employment challenges employers, injured workers and even doctors.

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Doctor training focuses on treating injuries, not on uncovering their cause, said Nancy Greenwald, a Boise, Idaho-based physician who treats workers’ comp patients.

“It’s one of the hardest things we do as physicians to really pinpoint what caused that particular injury,” she said.

Throw in the possibility of pre-existing conditions or an injury aggravation occurring after the industrial harm and making the right judgment call regarding the payer’s responsibility is even trickier.

While such scenarios present a challenge in determining the scope of legitimate claims, the schemers utilizing cappers in Southern California willfully take advantage to perpetuate fraud.

Last year, for example, a San Diego grand jury indicted doctors, medical providers and attorneys allegedly participating in a scheme involving cappers and $450,000 in illegal kickbacks.

Prosecutors allege it generated millions of dollars of fraudulent workers’ comp claims.

Other cappers have been busy in Southern California’s Orange and Los Angeles counties, soliciting workers who recently lost their jobs due to plant closings or other factors, Rassp said.

Rassp is alarmed by the practice because it increases claims payer suspicions, driving them to challenge more cases even when causation is legitimately work-related, he said.

Workers validly harmed on the job pay the price.

“If the problem is employment-related, deal with that.”– Stuart Colburn, a defense attorney at Downs Stanford P.C in Austin, Texas

A “glut” of post-termination cumulative trauma claims filed in Southern California perplexes employers who may delay benefit payments and create unwarranted friction with legitimately injured workers when they attempt to protect themselves, agreed Edward E. Canavan, vice president of the workers’ comp practice and compliance at Sedgwick Claims Management Services.

“It’s unfortunate,” because injured workers have families to care for, Canavan added.

The workers’ comp industry needs to consider legislative and regulatory changes to curb Southern California abuses while continuing to pay legitimate claims, Canavan said.

Nationwide, increased discussions about causation standards come after a number of states raised the level of medical evidence required to prove a work-related injury, said Thomas A. Robinson, co-author of “Larson’s Workers’ Compensation Law.”

“There are at least a half dozen states that over the past decade and a half made it more difficult for the claimant to prove their case based on requiring more definite medical opinions,” Robinson said.

Debra Levy, SVP, York Risk Services Group

While implementation of those laws “has sort of snuck up on people,” claimant representatives are increasingly complaining about them while claims payers want legislatures in more states to adopt similar legislation.

Greg McKenna, senior vice president for external affairs at Gallagher Bassett, expects more states to consider reforms with strengthened causation standards.

But passage of such laws probably will depend on balancing them with increased benefit amounts, he said.

“I really think lawmakers and employers are wrestling with a new kind of workforce,” McKenna said.

In the past, when workers remained at a single job for years, employers could more easily accept workplace responsibility for cumulative trauma, McKenna said.

But with workers frequently changing jobs, and perhaps even working a second job in the “gig-economy,” employers are asking whether they should accept cumulative-trauma injuries that workers may have acquired during previous employment.

Similarly, an older U.S. workforce raises questions about whether injuries are work-related or stem from age-related continuous degenerative processes.

The aging workforce, general increase in co-morbid conditions and uncertainty over group health make it more important than ever for payers to confirm that alleged injuries actually resulted from workplace accidents, said Maureen McCarthy, senior vice president, workers’ compensation claims, at Liberty Mutual.

Meanwhile, a U.S. Department of Labor report released in 2016 reviewed the impact of state laws with stricter causation standards that increased the burden of proof required for claimants to prove a workers’ comp claim, Robinson noted.

The report said that “issues of causation of injury or illness have always presented challenges.”

It added that “there is substantial cause for growing alarm,” because of increasingly complex challenges workers face with new causation standards requiring work to be the major contributing cause of disabilities.

Observers fret that the DOL’s report will drive federal intervention in state workers’ comp programs.

That still leaves the common challenge of filtering out other injury causes from workplace causation. The number of cases presenting those challenges can shift.

For full report: www.cwci.org/store.html

The Texas Department of Insurance, for example, has seen an increase in injured workers challenging the findings of designated doctors. They are requesting a “causation analysis” to determine issues such as maximum medical improvement, impairment rating, and extent of injury, a TDI spokesman said.

The department has not determined why more causation challenges are occurring.

But defense attorney Stuart Colburn at Downs Stanford P.C. in Austin said claimants have grown smarter at meeting requirements for challenging doctor findings that determine issues such as the extent of injury and return-to-work ability.

Mitigating claims with questionable causation issues calls for employers to identify the problem’s origin, Colburn said.

Employers experiencing multiple, unwitnessed, soft-tissue injuries should take a “big-picture approach” to learn, for example, if issues such as problematic employer/employee relations or the frequent assigning of unpleasant tasks is driving claim filings, he advised.

“If the problem is employment-related, deal with that,” Colburn said.

Return-to-work programs can help reduce unwarranted claims when workers realize they will be assigned other tasks rather than receiving time off, Colburn said.

Do not allow claims examiners to become jaded and assume a battle is lost when a jurisdiction’s laws, such as California’s, frequently work against favorable outcomes, said Debra Levy, senior vice president of product management and national workers’ comp practice leader at York Risk Services Group.

“Adjusters shouldn’t say, ‘That’s just the way the state is,’ without thoroughly investigating a claim,” she said. &

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.

More from Risk & Insurance

More from Risk & Insurance

Risk Report: Entertainment

On With the Show

Entertainment companies are attractive and vulnerable targets for cyber criminals.
By: | December 14, 2017 • 7 min read

Recent hacks on the likes of Sony, HBO and Netflix highlight the vulnerability entertainment companies have to cyber attack. The threat can take many forms, from the destruction or early release of stolen content to the sabotage of broadcast, production or streaming feeds.

Brian Taliaferro, entertainment and hospitality specialist, JLT Specialty USA

“Cyber attacks are becoming the biggest emerging threat for entertainment companies, bringing risk to reputations, bottom lines and the product itself,” said Brian Taliaferro, entertainment and hospitality specialist, JLT Specialty USA.

For most entertainment firms, intellectual property (IP) is the crown jewel that must be protected at all costs, though risk profiles vary by sub-sector. Maintaining an uninterrupted service may be the biggest single concern for live broadcasters and online streaming providers, for example.

In the case of Sony, North Korea was allegedly behind the leak of stolen private information in 2014 in response to a film casting leader Kim Jong Un in what it considered an unfavorable light.

This year, Netflix and HBO both faced pre-broadcast leaks of popular TV series, and Netflix last year also had its systems interrupted by a hack.

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Online video game platforms are also ripe for attack, with Steam admitting that 77,000 of its gamer accounts are hacked every month.

The list goes on and will only get more extensive over time.

Regardless of the platform, any cyber attack that prevents companies from producing or distributing content as planned can have huge financial implications, particularly when it comes to major releases and marquee content, which can make or break a financial year.

“People and culture are the biggest challenges but also the keys to success.” — David Legassick, head of life science, technology and cyber, CNA Hardy

The bottom line, said David Legassick, head of life science, technology and cyber, CNA Hardy, is that these firms have a combination of both assets and business models that are inherently open to attack.

“Vulnerabilities exist at every point in the supply chain because it’s all tech-dependent,” he said, adding that projects often run on public schedules, allowing criminals to time their attacks to maximize impact.

“The combination of IP, revenue and reputation risk make entertainment a hot sector for cyber criminals.”

Touch Point Vulnerabilities

Film, TV, literary and music projects invariably involve numerous collaborators and third-party vendors at every stage, from development to distribution. This creates multiple touchpoints through which hackers could gain access to materials or systems.

According to Kyle Bryant, regional cyber manager, Europe, for Chubb, there is nothing unique about the type of attack media companies suffer — usually non-targeted ransomware attacks with a demand built in.

“However, once inside, the hackers often have a goldmine to exploit,” he said.

He added targeted attacks can be more damaging, however. Some sophisticated types of ransomware attack, for example, are tailored to detect certain file types to extract or destroy.

“NotPetya was designed to be non-recoverable. For a media company, it could be critical if intellectual property is destroyed.”

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As entertainment companies have large consumer bases, they are also attractive targets for ideological attackers wishing to spread messages by hijacking websites and other media, he added.

They also have vast quantities of personal information on cast and crew, including celebrities, which may also have monetary value for hackers.

“It is essential to identify the most critical information assets and then put a value on them. After that, it is all about putting protection in place that matches the level of concern,” Bryant advised.

As with any cyber risk, humans are almost always the biggest point of vulnerability, so training staff to identify risks such as suspicious messages and phishing scams, as well as security and crisis response protocols, is essential. Sources also agree it is vital for entertainment companies to give responsibility for cyber security to a C-suite executive.

“People and culture are the biggest challenges but also the keys to success,” said Legassick.

“Managing the cyber threat is not a job that can just be left to the IT team. It must come from the top and pervade every aspect of how a company works.”

David Legassick, head of life science, technology and cyber, CNA Hardy

Joe DePaul, head of cyber, North America, Willis Towers Watson, suggested entertainment companies adopt a “holistic, integrated approach to cyber risk management,” which includes clearly defining processes and conducting background checks on the cyber security of any third party that touches the IP.

This includes establishing that the third parties understand the importance of the media they are handling and have appropriate physical and non-physical security at least equal to the IP owner in place. These requirements should also be written into contracts with vendors, he added.

“The touchpoints in creating content used to be much more open and collaborative, but following the events of the last few years, entertainment firms have rapidly introduced cyber and physical security to create a more secure environment,” said Ryan Griffin, cyber specialist, JLT Specialty USA.

“These companies are dealing with all the issues large data aggregators have dealt with for years. Some use secure third-party vendors, while others build their own infrastructure. Those who do business securely and avoid leaks can gain an advantage over their competitors.”

Quantification Elusive

If IP is leaked or destroyed, there is little that can be done to reverse the damage. Insurance can cushion the financial blow, though full recovery is very difficult to achieve in the entertainment space, as quantifying the financial impact is so speculative.

As Bill Boeck, insurance and claims counsel, Lockton, pointed out, there are only “a handful of underwriters in the world that would even consider writing this risk,” and sources agreed that even entertainment firms themselves struggle to put a monetary value on this type of exposure.

“The actual value of the IP taken isn’t generally going to be covered unless you have negotiated a bespoke policy,” said Boeck.

“If you’re in season five of a series with a track record and associated income stream, that is much easier, but putting a value on a new script, series or novel is difficult.”

Companies for whom live feeds or streaming are the primary source of revenue may find it easier to recoup losses. Determining the cost of a hack of that sort of service is a more easily quantifiable business interruption loss based on minutes, hours, ad dollars and subscription fees.

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Brokers and insurers agree that while the cyber insurance market has not to date developed specific entertainment products, underwriters are open for negotiation when it comes to covering IP. The ball is therefore in the insured’s court to bring the most accurate projections to the table.

“Clients can get out of the insurance market what they bring to the equation. If you identify your concerns and what you want to get from insurance, the market will respond,” said Bryant.And according to Griffin, entertainment companies are working with their brokers to improve forecasts for the impact of interruptions and IP hacks and to proactively agree to terms with underwriters in advance.

However, Legassick noted that many entertainment firms still add cyber extensions to their standard property policies to cover non-physical damage business interruption, and many may not have the extent of coverage they need.

Crisis Response

Having a well-planned and practiced crisis response plan is critical to minimizing financial and reputational costs. This should involve the input of experienced, specialist third parties, as well as numerous internal departments.

Ryan Griffin, cyber specialist, JLT Specialty USA

“The more business operation leaders can get involved the better,” said Griffin.

Given the entertainment industry’s highly public nature, “it is critically important that the victim of a hack brings in a PR firm to communicate statements both outside and within the organization,” said Boeck, while DePaul added that given that most cyber attacks are not detected for 200-plus days, bringing in a forensic investigator to determine what happened is also essential.

Indeed, said Griffin, knowing who perpetrated the attack could help bring the event to a swifter and cheaper conclusion.

“Is it a nation state upset about the way it’s been portrayed or criminals after a quick buck? Understanding your enemy’s motivation is important in mitigating the damage.”

Some hackers, he noted, have in the past lived up to their word and released encryption keys to unlock stolen data if ransoms are paid. Inevitably, entertainment firms won’t always get so lucky.

Given the potentially catastrophic stakes, it is little surprise these firms are now waking up to the need for robust crisis plans and Fort Knox-level security for valuable projects going forward. &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected]